Weekly Wrap. Week ended 6/3/20

This is a bearish market. This is a market for traders. Investors – sit out

XJO down this week -3.49%.

XJO is now well below the 200-Day SMA which counts as a line between bull and bear markets.

Strategy – Sell the rallies.

Cumulative New Highs Minus New Lows for the Australian Market continues to deteriorate:

This chart changes slowly. But when it changes – it should not be ignored. It is currently bearish.

Rate of Change, Bonds/Stocks. (Bonds in this graph are represented by IAF, a composite bond ETF, and stocks are represented by STW, a tracking ETF for XJO.)

This week saw a drop in this Ratio. That suggests we’ll see a short-term rebound in stocks.

Next, a graph of stocks above key MAs, 200, 50 and 10:

Technically, this chart shows some improvement. Last week, only one stock was above its 10-Day MA. This week fifteen stocks are above their 10-Day MA. That’s an improvement. Green shoots? Maybe. But – don’t get any ideas that we’re seeing a V-Shaped recovery in stocks.

While I’m on about stocks showing some positive qualities, here’s a list of stocks that are above both their 200-DMA and 50-DMA:

CWY, NST, EVN, DXS, CSL, RMD, SHL, DMP, TPM.
This group is dominated by defensives. Three stocks are from the Health Sector (XHJ). Two are Gold Miners (XGD). DXS is from the Real Estate Sector. TPM is a Telecommunications stock (XTJ). So six out of nine are defensives or safe havens. The odd ones out are Domino’s (DMP) and Cleanaway (CWY). They might be worth a look.

Only one sector XHJ (Health) remains positive on the Cumulative Momentum Index:

Defensive sectors are relatively doing better than risk assets: Utilities (XUJ), Telecommunications (XTJ), ConsumerStaples (XSJ), Property (XPJ).

Here’s the CMI Chart for Large Cap stocks with low volatility:

The only positive stocks are CSL, SHL and APA. That qualifies them as picks for this week. All three are disqualified, however, because they are short-term bearish with the 5-DMA below the 20-DMA. So there are no stock picks for this week.
The only two ETFs which qualify on the basis of both criteria are IAF (composite bonds) and Gold (POG in Ozzie Dollars). They were the picks from the previous week, continue to hold for this week. Physical Gold in Oz Dollars (ETF) was up this week +4.9%. IAF was down -0.22%.

That’s it for this week. I’m optimistic about a short-term bounce, but expect it to be a counter-trend rally.